Growth dependence of welfare states: a semi-systematic review of drivers and policy responses

Abstract

Critiques of economic growth are receiving increased scientific and public attention. The post-growth literature discusses how wellbeing can be achieved for all within planetary boundaries. However, current welfare states, which play a crucial role in supporting health and wellbeing, are often seen as growth dependent. The drivers of welfare state growth dependencies and related policy responses remain poorly understood. In this Review, we address this gap and provide an overview of drivers and policy responses, by performing a semi-systematic literature review. The Review identified key drivers that the literature suggests, such as the growth dependence of employment and related welfare funds, rent extraction and for-profit provisioning, increasing inequality, ageing societies, political power of vested interests, and environmental impacts. Policies proposed as responses to these drivers include maintaining employment without growth, using less growth dependent revenues, restricting rent seeking and political power of vested interests, implementing predistributive and redistributive policies, implementing preventive health-care approaches, and mitigating climate change. We argue that a more holistic assessment of policies should consider the interaction between the supply of welfare funding and demand for welfare spending. Finally, we summarise views in the literature on whether welfare state growth independence can be achieved within a capitalist system.